Buying house from a parent

[springlike]

Would be interested in people's thoughts ... my DS (sister) is looking to get on the property ladder following a divorce. She has some money for a deposit and could get a mortgage for £300,000 - maybe a little more. Our DPs are looking to downsize and so DS has expressed an interest in buying their house. This is probably worth around £475,000 - £500,000. DPs would then use money to get themselves something a bit smaller and more manageable. Are DPs allowed to sell her the house for less than market value? At the moment the house would be jointly left to both of us, so could we have legal documentation written up that would show that DS had some of her inheritance early? I know there may be an issue if parent's died in 7 years after giving this inheritance but what other facts should we all be aware of please? Thanks for any advice.

If your parents sell under market value, they will essentially be gifting the price difference to your sister - this has a while bunch of legal and tax implications, so you should advise both your sister and parents to talk to their solicitors.
www.co-oplegalservices.co.uk/media-centre/articles-jan-apr-2017/can-i-buy-my-parents-house-under-market-value/

She and your parents would need proper legal and tax advice. As previous poster says, there are several implications. Some mortgage lenders are also cautious about lending in this sort of arrangement, so your sister would need to ensure her lender doesn’t have a problem.

The “getting some inheritance early” aspect is problematic in the sense that “your” share of the inheritance is only theoretical, there may not be any assets or money left for you by the time they die.

How would your parents give you the differential you mention? They have given a lot to your sister early but not to you. What happens if they spend it? On fees for an old persons home? Or endless holidays? What if they borrow on their new residence and the proceeds of any sale are used to pay this off? It’s a plan that’s fraught with issues for you.

Your sister cannot afford their house. If they are gifting circa £150,000 to her now, that’s considerable. How would you be certain you would get £150,000 later. I would keep your sisters house and the sale of your parents house utterly separate. If your parents have spare money, give it equally now. To both of you. Are they rich enough to gift £150,000 now?

Thank you for the replies so far. I can see that this is a tricky one but I guess if they decide to sell to her (partly giving) I don't think I have much say in it. Their house, their money! I also don't want to sound like I am being awkward by saying anything. It's up to them what they decide to do, I guess.

It’s a shame when families cannot have open and honest discussions. You are potentially very much the second class sibling here. Shame your parents are ok with that.

It's so sad that so many people on here wouldn't be able to see their parents do something nice for their sister without going... "what about meeeeeee". Sometimes one child needs more than the other and it may be op has or will have more at other times. It may be they put their new property in her name to avoid iht in future but you don't know.

Yes it's possible op but will need to be done carefully so that they don't risk issues with stamp duty and iht if they were to die within 7 years. Make sure they take legal advice

If they are likely to need care in the next few years be careful of deprivation of assets.

Why does the sibling need to buy a house valued at £500,000 for way less than it’s value? That’s the problem. Sibling can get a mortgage for £300,000. Hardly a shabby amount. She can buy a house with that. Parents don’t seem to have a need to gift £150,000 now. They have not discussed their intention regarding money with the whole family. If it was £10,000 it probably wouldn’t be an issue. At a vast sum of money, it is a big problem.

It is utterly stupid for elderly people to put their house in the name of someone else. They could, for example, be evicted. It’s seem as evasion for care homes fees. It means they are simply not in control of their own assets. This is a daft proposition from any angle.